NEW YORK (CNNfn) - The destruction of New York's World Trade Center near Wall Street sent a shock through overseas financial markets Tuesday as stocks fell, oil prices surged, the dollar tumbled and money flooded into Treasury bonds.

European markets closed in negative territory, led by insurance stocks and financial houses, as traders reacted to the early morning explosion in the U.S. that could be the worst terrorist attack in its history.

"This is a major, major act of war and act of terrorism that will have widespread economic consequences," said Jeremy Siegel, professor of finance at the Wharton School of Business, who called the financial reaction unsurprising given the crisis.

The collapse of the twin towers came after two hijacked airliners were crashed into New York's tallest buildings, just blocks from the New York Stock Exchange. In Washington, another plane was crashed into the Pentagon, and the White House was evacuated.

Standard Life's head of global strategy, Andrew Milligan, said in Edinburgh: "Appalling as the event is, the macro impact will be limited as the UK knows from the extremely sad series of IRA bombs in London."

Oil firm BP (BP-A) led gainers, jumping 4.9 percent. Shell Transport and Trading (SHEL) rose 2.2 percent. Its partner Royal Dutch, with which it owns the Royal Dutch/Shell group, rose more than 1 percent in Amsterdam.

The pan-European FTSE Eurotop 300 index fell 6.4 percent, with the insurance sector falling nearly 13 percent. Transport and life assurance also were among the biggest losers.

The oil and gas sector was the lone riser, climbing 2 percent amid fears of fuel shortages if the attacks are connected with events in the Middle East.

On Wall Street, the New York Stock Exchange suspended trading for the day. The Chicago Board of Trade and the Nasdaq Stock Market also were closed.

Oil prices rose, but were down off their highs, with Brent crude rising $1.57 to $28.57 a barrel.

The Israeli shekel sank to an all-time against the dollar while Mexico's benchmark IPC index of the 35 most-liquid stocks on the Mexican stock exchange sank 5.5 percent to 5,531 before trading was halted. In Canada, Toronto's main stock gauge fell about 4 percent.

Treasury securities, often a safe haven amid uncertainty, rose. The yield on the 30-year bond fell to 5.39 percent from 5.44 percent. The dollar fell against the yen and euro.

In Hong Kong, where Wednesday trading may begin in several hours, officers patrolled around the U.S. consulate.

From Florida, President Bush called the incident an act of terrorism. No immediate word was available on when U.S. trading would resume.

But Wharton's Siegel said it's important to reopen trading for symbolic reasons.

"I think we have to show the world that we are not intimidated," he said.

No information on deaths from the attacks was immediately available, but the toll is certain to be high. -- Reuters contributed to this report